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Section 179 Could Help You Take Deductions Faster

Bret CurtisBelow is an excerpt of an article by Bret Curtis, tax shareholder in our Overland Park office, which was published in Thinking Bigger Business. Click here to read the full article on the Thinking Bigger website.

There are new opportunities for small business owners who want to take advantage of the powerhouse deduction Section 179, which is permanent thanks to Congressional action last year.

If you haven’t heard about Section 179, it’s a boost for small business owners that allows for taking a deduction for tangible property in one year. Otherwise, you’d have to take it over the term of the asset’s useful life, which can be up to 39 years.

How Does This Work?
Here is an example of how Section 179 can help a small business. In 2015, Susan bought a used $4,000 press for her printing business. Without Section 179, she would have to deduct a portion of the purchase price over its five-year useful life.

Under the old rules, the depreciation deduction schedule for the new press looks like this:

Year Depreciation Deduction
2015 $800
2016 $1,280
2017 $768
2018 $461
2019 $461
2020 $230

 

 

Under Section 179, Susan could deduct the entire purchase price of $4,000 in one year, rather than having to depreciate the equipment over several years.